Commissioner predicts calm after the storm
EU competition chief gives his verdict on the Irish economy
Joaquín Almunia in Dublin yesterday: ‘Economic sovereignty has disappeared. Nobody is fully sovereign.
The smallest tinge of panic flashed across the face of EU competition commissioner Joaquín Almunia when it was suggested yesterday that stormy weather could prevent him from flying back to Brussels after a whistle-stop day of Dublin speaking engagements.
It was a reasonable enough fear on his part – he already spends quite enough of his time dealing with Irish problems while at his desk in Brussels without having to lose a night to Irish weather too.
At the moment, the Spanish native is busier than a competition commissioner was ever intended to be, mostly due to the still relatively fresh burden of approving the repair of the EU banking sector. In the Irish context, this means the restructuring of AIB, Permanent TSB and the credit unions sit on his desk, with Bank of Ireland’s restructuring already having met with favour. He is also considering the Government’s efforts to limit the funds it must inject into the VHI, to increase its solvency and create a level playing field in the health insurance sector.
Meanwhile, this week alone, he has imposed a €1.7 billion fine on an EU banking cartel and brought Russian energy giant Gazprom back from the brink in a major antitrust investigation. In this context, it is perhaps forgivable that he is not on top of every detail of the Republic’s competition issues.
He says he expects the restructuring plans for both Permanent TSB and AIB to be approved “soon” but declines to commit to deadlines. Similarly, he and his internal market counterpart Michel Barnier are “analysing” a Government request for a 12-month extension on the VHI issue and expect to decide on it imminently.
He is reluctant to estimate how far the Republic has travelled down the road of resolution in the banking sector.
“I am concerned by the very reduced number of banks operating within the market,” he says, quickly noting that any Commission approval for a bank restructuring includes the proviso that the bank in question will “co-operate” with new market entrants that might present themselves in the future.
While such camaraderie seems unlikely (and distant) in practice, Almunia points out that when your very existence has depended on sharing in a €70 billion public money bailout of the State’s banking sector, you are not in a position to argue with a few conditions.
Despite his title, Almunia’s first concern in banking is rescuing and fixing, with ensuring competition afterwards.
In the short term, Almunia wants to “look into the future with positive glasses”, but he can also see challenges ahead.
“The Irish economy has a very good capacity to grow well above the average of the euro area,” he says.
He has no time for the suggestion that while economic sovereignty will technically be restored when the bailout ends, continuing EU supervision will continue to dilute real domestic powers.
“Economic sovereignty has disappeared. Nobody is fully sovereign,” he says. “Who has not lost it?” In Almunia’s eyes, this is not a bad thing, since it logically leads to greater reliance on the strength of the EU and playing off the potential power of the single currency.
Democracy is another matter, however, with the Spanish socialist strongly advocating the theory that “citizens are the final masters of the game.” In this light, he would like to see some “refinement” of oversight systems for any future bailouts.
In the case of Ireland, he hopes and expects that such monitoring will be of no more than academic interest.